Decide that you want to move, and that buying a home is right for you and your situation.  

If you’re a current renter:  You will want to be sure you’re not going to be moving for at least a few years.  Even in an appreciating market, it can take 3+ years to break even on the sale of a property.  That shouldn’t deter you, as there are great benefits to ownership including tax incentives and potential appreciation.  But you shouldn’t be looking at it as a 1-2 year plan; if that’s as long as you can commit for, then generally, you should remain a renter.  

If you’re upgrading / Moving UP: With rising home values over the last few years, many people have found themselves with a good amount of equity in their homes.  This makes it a perfect opportunity to move into a larger property. In this situation, it’s important to research and understand the implications of pre-selling your home vs selling after finding a new home.  Drivers of this decision will include your personal financial position and the market dynamics in both your existing and new neighborhoods.

If you’re downsizing / Moving DOWN: We tend to see empty nesters doing this, in addition to suburban dwellers who want to be closer to city centers.  Again, consideration needs to be given on how to execute this and not end up without a home.

Questions to Ask at this Stage:
— How much can you actually afford?
— What will your monthly mortgage be?

Resources:
If you aren’t already working with a mortgage broker, we can help with recommendations.

Bringing on an expert early on in the process is in your best interest.  A knowledgeable real estate broker can advise you on how to best position yourself to achieve your goal of owning a new home.  

When finding a broker, a face-to-face initial consultation is best. This is someone you will be working with closely and will have to trust with confidential, personal information.  So, make sure you feel good about them!

Questions to Ask at this Stage:
— Will I feel comfortable with this Realtor?
— How well does the Realtor know the neighborhood?
— Does the Realtor understand what I’m looking for?

Resources:
— Blog Post:  What’s a Realtor?  Do I need one?
— Things clients have said about SCOUT

Before seeing a single property, you should get pre-approved for a mortgage.  And not just an online form – you need to speak with an actual mortgage professional to understand how much you can afford and what your lending terms will be.  

To obtain a pre-approval, a lender should not only be getting your credit and income information, but they should be running your loan scenario through an automated underwriting model to ensure a full loan approval can be obtained.  

Understand the difference between lending through a bank vs. a mortgage brokerage.  Sometimes, a bank’s loan criteria can be more strenuous than it technically has to be – this is called an “overlay”.  For the most available options, we always recommend speaking with a Mortgage Broker. They have access to many channels of lending in order to put you in the best situation for your needs. And know that not all mortgage brokerages are the same! When selecting a brokerage, choose a company that is self-funded for closings and performs in-house underwriting of loans.

If you need help finding the right mortgage broker – we’re always happy to make some introductions. 

Questions to Ask at this Stage:
— How much can you actually afford?
— What will your monthly mortgage be?

Resources:
— If you aren’t already working with a mortgage broker, we can help with recommendations.

This is typically a bilateral process between you and your Realtor.  With so much information available online, you can easily browse properties for sale online, and let your Realtor know properties that interest you.  

They will also be sending you properties, and likely creating a search for you directly from the MLS (multiple listing service, where properties for sale are listed). Be sure to discuss how you envision this process, as each individual has different desires for this. And, make sure you’re getting data from reputable, up-to-date sources.  Certain sites can lag in data, or have self-populated information that is not automatically synced with the MLS.

For up-to-the-minute data, check out our website’s full MLS access here!

Questions to Ask at this Stage:
— Which neighborhood is best for my lifestyle?
— What are my must-haves for a new home?
— Do I want a fixer-upper or something more move-in ready?
— What will my commute be like?
— What are the schools like?
— How much are the taxes?

Resources:
— Search Homes for Sale
— Request a Custom Search

Get inside. A picture is worth 1,000 words – but in real estate, it can leave out HUGE details! So the only way to find out what a home is actually like is to schedule a tour. A first pass is usually a 15-30 minute walkthrough of a home.  On these initial walkthroughs, it’s important not to get hung up on small details, but to take in an overall feel of a property. At the same time, a good broker can walk you through the positives and drawbacks of a home, and help you realize an end vision if there are modifications, updates, or other things needed.  

Early in the process, tours of several homes at a time usually work well so you can begin to see what’s in the area you’re looking at, and find out what you actually need, want, and can afford.  Much reflection should be made after tours, and a more refined mindset of absolute “must haves” and compromises you are willing to make.

With the more refined knowledge of what suits you best, searches are narrowed and tours are more pointed.  As homes meeting your criteria come to market, you will likely see them ad hoc as quickly as possible.

Second showings can be very useful, but at times due to market competition, may not be feasible.  Trusting your gut isn’t a bad thing – buyers often cite a certain “feeling” when they find their home.  Should you not get in a second showing prior to going under contract, you will still be able to see the house before buying a home and moving in, and would even have an opportunity to not purchase should you realize it was a mistake. 

Questions to Ask at this Stage:
— Can I imagine myself living in this home?
— Are the things I don’t like about the home fixable?
— What compromises am I willing to make?

Once you’ve fallen in love with a property, it’s time to make an offer!  Your initial offer will be presented on a full contract that is submitted to the sellers.  Here are the decisions / considerations you will be faced with:

Price: Potentially, the driving factor of all else.  The list price of the home may be negotiable but sometimes is not.  Your Realtor needs to know the market, and gage what similar homes have sold for, the overall demand for the type of property, market time, list price v. closed price ratios, and other relevant data to help you derive an initial offer price.  A home with lower demand, or lots of market time, is probably much more negotiable than a brand new listing in a highly desirable area. That’s where you need to rely on the experts when buying a home!

Closing Date: You need to decide on a proposed closing date.  These dates can sometimes change, but an exact date must be chosen.  Your broker should be speaking with the seller’s broker to get an understanding of what is most important to them.  Some sellers can’t move fast enough, while others need a bunch of time. Generally, closings happen 30-90 days from the date of the offer.

Earnest Money:  This is money essentially to show you’re serious about the purchase.  And you need to be because you could lose this! Though difficult to lose, the bottom line is you are putting earnest money into a transaction with the expectation that you’re moving forward and that money will be applied to the overall costs of the purchase.  So if you were coming out-of-pocket to closing with $50,000, and had $10,000 in earnest money deposited, then you would owe $40,000 at closing. Earnest money usually ranges from $5,000 up to 5% of the purchase price.

Attorney Review and Inspection Periods: Some contracts default to a 5 business day period; others allow you to choose these periods.  A typical review period would be 5-7 business days.

Other Seller Concessions:  During this time, you should be asking for any concessions you want or need.  Some home buyers need a closing credit as part of their financing to make a deal work.  Home warranties, sale contingencies, and any other term should be presented in the initial offer so the seller can weigh all aspects of an offer.  

Questions to Ask at this Stage:
— What’s the highest/lowest amount I am willing to pay?
— How much of a deposit can I afford to pay?
— When do I want to move in?
— Do I want the seller to concede to anything?

In almost all sale transactions, the initial offer is somehow changed or modified as agreed by both parties.  During the negotiation period, both parties’ brokers will communicate in writing or conversation. However, there will not be a new or modified contract each time a party counters another party.  

There are many schools of thought on how to go about negotiating.  A sellers appetite to negotiate will vary based on:

• Their personal belief of how much their property is worth
• How long they have been on the market
• How much other homes have negotiated on their sale prices
• The demand for the type of property they are selling

Always keep in mind that by making a counteroffer, you are negating all other offers that have preceded it.  You might be able to get the other party to still agree to what they had previously offered, but it is not a guarantee.  If your counteroffer is overzealous, then the other party might change their tone as well.

Ultimately, our goal is a win-win for all parties involved. You have to remember that one day, you will be in the seller’s position.  These transactions are not big corporations going cutthroat against each other to win out a great deal.

It’s people dealing with other people, so the emotional capital is very high. Always treat others the way you want to be treated.  At the end of the deal, you should feel confident that you can sit across the table from this person and share positive thoughts about the home you have in common, and the overall experience.  While it doesn’t always go this way, it is what we strive for.

Questions to Ask at this Stage:
— How would I want to be treated if I was the home seller?
— What would happen if we didn’t come to an agreement?

After negotiating all terms of the contract and agreeing, then you have a deal!  Now is the time that an updated contract will be created, all parties will sign and initial, and the deal is accepted on the date the seller signs the document.  

Good time for a high-five, but hold off on the champagne – there is still more work ahead!

Questions to Ask at this Stage:
— Who do I make the earnest money check out to?
— When does my attorney approval period start?

The sales contract will include a stated amount of time to complete any and all professional inspections.  The intent of the inspection is to identify significant, not readily evident functional issues with the property, and attempt to ratify these with the seller.  It is not for cosmetic issues, minor repairs, or replacement of items that are old. It is for discovering functionally deficient systems of a home. Typically, a buyer will spend $500 – $1000 on inspections, so they go into this process with the full intent of moving forward on the purchase.  Here are some of the inspections available:

• General Professional Inspection – This is having a licensed home inspector go over and do a thorough check of a home.  The inspector’s job is to look for “red flags”. They cannot make final determinations on how to fix issues. For example, if there’s a puddle next to a drain, they may point this out and recommend having a licensed plumber further evaluate.  Inspectors have a wide array of building knowledge, but ultimately rely on a specialist to make a final determination of a problem. Cost Range: $300 – $700; dependent on size of home, and scope of inspection
• Radon Test – Radon is a colorless, odorless gas produced by the Earth’s decay; it is believed to be carcinogenic.  Several years ago, the U.S. EPA set a threshold for the amount of radon gas that is acceptable within a home. As a buyer, you are required to receive a radon disclosure from the seller of any dwelling that is lower than the 3rd story.  So essentially, any single family home, townhouse, or condo with space on the 1st or 2nd floor. A radon test is essentially pass / fail; should it exceed a certain level, then mitigation is required. The test takes 48 hours to complete, so it’s important to order immediately after going under contract. Cost Range: $150 – $300 for testing.  Mitigation runs + / – $1,500
• Sewer Line Camera Inspection – Many buyers choose to have a camera inspection of their sewer line completed.  This reveals any breaks in the line that might be causing issues. While any home could have a sewer line issue, it is especially common in older homes. Cost Range: $200 – $400
• Other Inspections – The list is just about endless for other types of inspections out there.  Often, subsequent inspections are scheduled as a result of the initial home inspection. Consult with your Realtor and Home Inspector to see if any other inspections would be valuable.  

Once your inspections are complete, you need to review and determine if you are going to ask the sellers to correct any issues before buying a home.  You can ask for actual repairs or a credit. Each transaction is different, so you need to consider the condition of the property, condition of comparable properties, and the price you are paying.  Always consult with your Realtor and attorney as to what would be appropriate and reasonable to ask for.

Your transaction attorney will be the one responsible for asking for any inspection requests via the sellers’ attorney.  Once both parties agree on something, a contract addendum will need to be drafted and signed.

Questions to Ask at this Stage:
— Who should do my home inspection?
— Do I need a radon test?
— Do I need a sewer line inspection?
— What findings from the inspection report are dealbreakers?
— What fixes are reasonable to ask the seller to make?

Resources:
— If you need help finding general or specific inspectors, we can help with recommendations.

The attorney review clause allows you to have your lawyer review your contract and be sure that it is legally sound and in your best interest to move forward.  The clause allows for an attorney to cancel a contract for any reason other than purchase price alone. An attorney may propose contract modifications, especially regarding property tax prorations, during this period.  Anything else out of the ordinary that cannot be expressed on a standard board contract will be addressed in this review.

Attorney review will conclude once both parties have agreed on inspection and attorney review items.  At this time, you have a “seasoned” contract! A huge hurdle to get through, but it’s probably not over yet…

Questions to Ask at this Stage:
— How much does a real estate attorney cost?
— How frequently during the purchase process will I engage with them?

Resources:
— If you don’t already have a real estate attorney, we can help with recommendations.

If you’re paying cash, then lucky you!  You can skip this step altogether. But the vast majority of buyers are obtaining financing for the purchase, usually in the form of a mortgage.  You will work directly with a bank or mortgage broker for these steps. They will need the contract, statutory disclosures, and any addendums resulting from attorney review.  Here are the essential parts of the process:

Appraisal – The bank wants a professional valuation completed on the property, to make sure the purchase price in the contract makes sense.  Should a property appraise for less than the contract price, you may have to renegotiate pricing or choose a different property. Most properties appraise just fine, but in appreciating markets, some will not.

Underwriting – This is where your lender is going to get very detailed information from you to verify assets, income, and expenses.  While it can be burdensome, it’s paramount to get these documents to your lender in a timely manner so as not to cause any delays for your transaction.

Homeowners Insurance – You will need to provide your lender with the agency that is providing you with homeowners insurance.  Your lender may have minimum requirements for your policy, as might any homeowner associations (if applicable).

Know that you are protected in the event that you cannot get a mortgage for the property, so long as your actions are not the cause of the mortgage rejection (i.e. you changed your mind, so decided not to give your lender your tax returns). The purchase contract will stipulate a number of days or date by which your financing is to be secured.  If it’s not, then the contract can be canceled with proper notice, and earnest money is refunded. But know that a good lender will do a thorough evaluation of your creditworthiness prior to you going under contract, thus mitigating the likelihood of a loan denial in the final stages of buying a home.

Once you get the Clear to Close —  it’s time to celebrate!!  This means that your lender has approved your financing and that the closing for the property can be scheduled.  YAY! The closing will take place at either a title company or attorney’s office. Note that closings occur during business banking hours, so 9AM to 3PM-ish, as the funds must be approved by a bank at the time of closing.

Questions to Ask at this Stage:
— What happens if the home doesn’t appraise for the purchase price?
— When does my financing contingency period expire?

Resources:
— If you don’t already have a homeowners insurance provider, we can help with recommendations.

Just before closing:  You will do a final walkthrough – one last check to make sure the home is in the same condition as it was when you viewed it before, and nothing was damaged when the sellers moved.  It is also a time to check on any repairs that were supposed to have been completed by the sellers.

Closing Day:  The big day is here!  This is where all of the official documents are signed, money is exchanged, and keys are given!  

A typical closing takes 90 minutes. And be sure to bring your ID and have wired any funds in advance.  It’s also a good idea to bring a checkbook, just in case…

Questions to Ask at this Stage:
— When should I schedule my final walkthrough?
— Where will be closing be held?
— Who needs to attend the closing?